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Section 80M, read with sections 80L and 80K of the Income-tax Act, 1961 - Deductions - Inter corporate dividends - Assessment years 1968-69 to 1970-71 - Whether relief under sections 80M, 80L and 80K should not be worked out in relation to gross amount of dividend income but on net amount of such dividend income- Held, yes FACTS The assessee was a statutory corporation set up for the purpose of making medium and long-term credits easily available to industrial concerns of India, particularly in circumstances where normal banking facility was inadequate and recourse to method of capital issue was impracticable. The main source of the assessee's income was interest on loans granted to industrial concerns in India. It also earned dividend, commission, interest and commitment charges on unutilised loans. For the assessment years in question, the assessee claimed relief under sections 80K, 80L and 80M. The Tribunal held that the relief under section 80M should be worked out in relation to the gross amount of intercorporate dividend and similarly relief under sections 80K and 80L also worked out in relation to the gross amounts of dividend, and not the net amount of such dividend after deducting the expenses relatable thereto under section 57. On reference: HELD In view of the decisions of the Supreme Court in Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120 and CIT v. P.K. Jhaveri [1990] 181 ITR 79, it would follow that under section 80K, deduction on gross amount received cannot be allowed and for the same reason, under section 80L as well, deduction on the gross amount cannot be allowed. Therefore, the Tribunal was not justified in holding that relief under sections 80K 80M and 80L be worked out in relation to the gross amounts of dividend, and not the net amount of such dividend after deducting the expenses relatable thereto under section 57. The case was decided in favour of the revenue. CASES REFERRED TO Distributors (Baroda) (P). Ltd. v. Union of India [1985] 155 ITR 120 (SC), CIT v. P.K. Jhaveri [1990] 181 ITR 79 (SC) and CIT v.Madras Motor and General Insurance Co. Ltd. [1986] 159 ITR 601 (Mad.). B. Gupta, R.C. Pandey and D.C. Taneja for…

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